NYC Municipal Water brings $645 million in upsized deal; San Francisco USD brings $150 million

By Aaron Hochman-Zimmerman and Sheri Kasprzak

New York, Jan. 22 - Despite still-volatile economic conditions, some issuers were able to price rather large offerings Thursday - including one upsized sale. Meanwhile, market insiders said some issuers are holding back from new offerings to see what President Barack Obama's economic stimulus package will mean for them and for their ability to sell bonds.

"Ultimately, I think it's a good plan," said one sellside source reached Thursday.

"I think issuers are going to find a way to sell their bonds with the least amount of hassle, even if they do have to go the taxable route. I like that it includes some tax credits for issuers who have to sell taxable bonds."

Another sellside source said he feels in the next month or so, more issuers will have a good idea of what they can expect and activity may pick up accordingly.

"The confusion and hesitance now is coming from 'What exactly will this package have in store for me, as an issuer?'" said the sellsider.

"What are the options available for the issuers? A lot of issuers are waiting to see how exactly this will pan out."

NYC water sale

Moving to the big sale of the day, the New York City Water Municipal Finance Authority priced $460 million in upsized series 2009EE water and sewer system second general resolution revenue bonds (Aa3/AA+/AA), said Ray Orlando, spokesman for the city's Office of Budget Management. The authority also added a $185 million refunding component to the sale for a total of $645 million in bonds sold Thursday.

"Due to strong demand, NYW was able to upsize the new money portion of today's sale from $300 million to $460 million, and NYW also added a refunding component to the sale, totaling an additional $185 million of refunding bonds," said a statement released Thursday by the authority.

The bonds were sold through lead manager Siebert Brandford Shank & Co.

The bonds are due 2014 to 2040 with yields ranging from 2.34% to 5.5%.

"During the one-day retail order period, which began on Wednesday ... and continued concurrently with the institutional order period today, NYW received approximately $97 million of retail orders," the statement said.

Proceeds will be used for ongoing capital improvements to the city's water and sewer system.

San Francisco USD's G.O.s

Elsewhere in Thursday's pricing action, the San Francisco Unified School District priced $150 million in series 2009B general obligation bonds Thursday, said a sellside source connected to the deal.

The bonds (Aa3/AA-/) were sold through lead manager Banc of America Securities LLC.

The bonds are due 2009 to 2024. Coupons on the bonds range from 1.5% to 5.25%, and yields range from 0.5% to 4.71%.

Proceeds will be used to design and construct projects throughout the district.

Lancaster correctional bonds

Not everything on the pricing calendar priced Thursday.

The Lancaster County Correctional Facility Joint Public Agency of Nebraska had planned to price $65 million in series 2009 building bonds but rejected the two bids it received, said a sellside source connected to the deal.

"They're looking for a wider range of bids," said the sellsider. "They're in no hurry to sell, so they're going to try and put it back out there and see if they can get some better bids."

Citigroup Global Markets Inc. had come in with the lowest true interest cost for the offering at 4.685572%, but the winning bid was rejected.

Coupons for the bonds (Aa1/AA+/), before rejection, ranged from 3% to 5%, but the yields had not been finalized.

Ameritas Investment Corp. was the financial adviser.

Once the sale is completed, proceeds will be used to construct, equip and furnish correctional facilities operated by the joint public agency.

Westchester bonds price

In other news, Westchester County in New York priced $135.16 million in series 2009 G.O. bonds (Aaa/AAA/AAA), but terms were not immediately available, said John Waltman of the county.

Citigroup was the lead manager for the bonds.

The sale included series 2009A bonds, which are due 2011 to 2024; series 2009B bonds, which are due 2009 to 2029; and series 2009C bonds, which are due 2009 to 2019.

Proceeds will be used for capital improvements, the construction of water and sewer facilities and refunding series 2003 bonds.

Also on Thursday, the Southern California Public Power Authority priced $115.84 million in series 2009 subordinate refunding series A bonds (Aa3/A+/), although details were not readily available, according to Craig Koehler, the authority's finance and accounting manager.

The deal was "successfully priced in a clearly difficult market," Koehler said.

J.P. Morgan Securities Inc. was senior manager for the negotiated bonds, which are due 2019 to 2023.

Proceeds from the sale were slated to refund all of the issuer's $121 million transmission project revenue bonds.

Miami-Dade school bonds price

In other pricing news, the School District Of Miami-Dade County of Florida revealed the terms on its $132 million series 2009 revenue anticipation notes Thursday.

The one-year notes, which priced Wednesday, were won by Citigroup and Barclays Capital Inc., according to Silvia Rojas of the district.

Citigroup purchased $107 million of the notes at 0.6%, and Barclays purchased $25 million at 0.55%.

"The sale went very well," Rojas said.

DeLara Associates acted as the financial adviser for the competitive sale.

Proceeds will renew a portion of one or more loans financed or refinanced by the district's series 2008B RANs and retire a portion of the 2008B RANs due Jan. 30, 2009.

Minnesota Housing sale

Looking to upcoming sales, the Minnesota Housing Finance Agency plans to bring $100 million in residential housing bonds to market early next week, said Bill Kapthahan of the agency.

The offering includes $26.795 million in series 2009A bonds, $33.205 million in series 2009B bonds and $40 million in series 2009C bonds.

Serial maturities range from 2010 to 2019 with term bonds due in 2023, 2024, 2029, 2032 and 2038.

RBC Capital Markets and Piper Jaffray will act as underwriters for the negotiated issue.

Proceeds will be used to purchase home mortgages to assist lower-income families become or remain homeowners.

WakeMed bonds ahead

Also looking forward, the North Carolina Medical Care Commission is expected to price $100 million in series 2009 health care facilities revenue bonds for WakeMed, said a preliminary official statement.

The bonds (Aa2//AA-) will be sold on a negotiated basis with Citigroup as the senior manager.

Proceeds will be used to construct and renovate hospital buildings and a parking garage as well as expand existing facilities in Cary, N.C., and Raleigh, N.C. The rest will be used to make a deposit to a debt service reserve fund.

Texas to sell water bonds

In other sales that are on the horizon, the State of Texas is working on a $152.96 million sale of series 2009-A G.O. water financial assistance bonds, said a preliminary official statement released Thursday evening.

The bonds (Aa1/AA/AA+) will be sold on a negotiated basis with Morgan Stanley & Co. Inc. as the senior manager.

The bonds are due 2009 to 2029 with a term bond. The maturity has not yet been determined for the term bond.

Proceeds will be used to provide financial assistance to municipalities for water projects.

Secondary weakness continues

For the third straight session, secondary municipals saw weakness Thursday, traders said.

"We got a break last week and now we're taking a beating this week," said one trader reached in the afternoon.

"There's a definite interest in [secondary] munis right now. We're seeing more interest than we did in late '08, but we're basically off with Treasuries these past few days."

Moving to specific trades, Chicago's recently freed-to-trade series 2008C G.O. bonds, which priced earlier this month after being delayed in December, were seen in play. The 5% 2034s were seen trading at 5.035% Thursday.

The New Orleans Aviation Board's series 2009 revenue refunding bonds were also trading. The 4% 2011s were seen at 3.998% Thursday.

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